SREI Infrastructure Finance - Buy

Infrastructure NBFC SREI Infrastructure Finance once again announced very good results despite partial slow down in the infrastructure boom. This integrated infrastructure giant finances equipment and infrastructure projects and will set to grow in the coming years by utilising huge opportunities in the infrastructure sector. Major businesses of SREI are construction equipment finance, infrastructure project finance and solar energy equipment finance. SREI is also planning to spend huge amounts in Telecom tower business and e-governance projects. Like Indiabulls, SREI management also likes to act to quick to capitalise on emerging opportunities and you can safely bet on them in execution. SREI Infra 2007-08 Results:

1. 58% rise in net profit- 132.7 crore Vs 84.1 crore.
2. 90% increase in income- 800.7 crore Vs 420.6 crore.
3. 63% growth in equipment finance loan book.

SREI Infra stock price analysis:

CMP: 119.85
P/E: 12.8
EPS: 9.3
Face value: 10
1 year high-low: 291-84.

Nostalgia:
Price of SREI Infra in 2004: Rs 16 (Rs 8 in 2003). 1500% returns in 5 years excluding dividend.

SREI Infrastructure Finance target price: 1 Year target price: 180-190.

Why should you invest in SREI Infrastructure Finance?

1. SREI recently bagged the largest REI has bagged the largest project consultancy assignment in the country. It will advise in the implementation of Ganga Express highway project in Uttar Pradesh.
2. SREI Sahaj e-village is planning to setup 25,000 common service centres to initiate e-governance in rural areas in 6 states.
3. Vast domain experience in Infrastructure financing. SREI is a specialist in providing customised solutions to infrastructure projects.
4. Huge investment opportunities in renewable energy business.
5. Reasonable valuations due to sharp fall in stock price.
6. Very low nonperforming assets (NPAs).
7. Quippo telecom Infrastructure of SREI group will invest Rs 6,000 crore in telecom tower business. Quippo will also bid for stake in Tata’s infrastructure business.
8. SREI will soon launch rural mobile telephony and courier service to capitalise on the Sahaj network’s common service centres.
9. This is a favourite sector of foreign investors. So SREI will march ahead once they return back.
10. Best management who is aggressive in capitalising the opportunities in Infrastructure finance sector.
11. We may expect something when SREI completes 20 years of existence.
12. Good ratings from credit rating agencies.
13. ICICI Prudential Mutual fund recently bought SREI Infrastructure Finance.
14. SREI won the best IT implementation award for 2008 by PC Quest.

Negative sign: Marginal slowdown in Infrastructure business.

Verdict: It is a safe and must buy for long term investors who believe in Indian growth story. Despite recent slowdown, India is still the second fastest growing economy in the world. Its bet on renewable energy business will bring huge financing opportunities in the coming years. Its strategic diversification coupled with aggressive management will bring good returns for the investors in the next 2-3 years.
(Source: Internet)